Slide 1: Third quarter fiscal 2018 earnings conference call
Third quarter fiscal 2018 Earnings conference call August 2, 2018
Slide 2: Participants on today’s call
Participants on today’s call Suzanne Sitherwood President and Chief Executive Officer Steven P. Rasche Executive Vice President and Chief Financial Officer 2 Spire | Third Quarter FY18 Earnings Conference Call
Slide 3: Forward-looking statements and use of non-GAAP measures
Forward-looking statements and use of non-GAAP measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward- looking statements in this presentation speak only as of today, and we assume no duty to update them.
Slide 4: At Spire, we’re connecting people and energy
At Spire, we’re connecting people and energy Our mission Answer every challenge, advance every community and enrich every life through the strength of our energy. Transforming our company • Growing organically • Investing in infrastructure • Acquiring and integrating • Innovation and technology 4 Sp
Slide 5: Moving forward confidently
Moving forward confidently • Delivered solid Q3 performance – Further improvement in operating performance – NEE per share of $0.31, in line with our expectations – Continued execution on our organic growth initiatives and capital investment plan – Advancing our non-utility businesses • Affirming ou
Slide 6: Continuing to grow our gas utilities
Continuing to grow our gas utilities • Continued execution of growth initiatives – On track with FY18 capital investment target, focused on infrastructure upgrades – $59 million of new business spend YTD, up 34% from last year – 5.7% growth in new meters over last year’s record pace • Further improv
Slide 7: Advancing our non-utility businesses
Advancing our non-utility businesses • Positioning Spire Marketing for further growth and success ‒ Strong year-to-date performance reflects ability to take advantage of favorable market conditions – Growing the team – Expanding geographically with Houston business center • Advancing Spire Storage –
Slide 8: Delivering solid quarterly results
Delivering solid quarterly results Third Quarter Ended June 30, Millions Per Diluted Share 1 Net Economic Earnings 2018 2017 2018 2017 Gas Utility $ 16.9 $ 23.3 $ 0.34 $ 0.48 Gas Marketing 4.4 2.3 0.09 0.05 Other (6.1) (4.0) (0.12) (0.09) $ 15.2 $ 21.6 $ 0.31 $ 0.44 Average Shares Outstanding 49.7 4
Slide 9: Growing revenues and margin
Growing revenues and margin Third Quarter Ended June 30, Millions Change (Millions) 2018 2017 $ % Operating Revenues Gas Utility $ 334.8 $ 306.6 $ 28.2 9% Gas Marketing 14.4 17.9 (3.5) -20% Other and Eliminations 1.4 (1.0) 2.4 n/m $ 350.6 $ 323.5 $ 27.1 8% 1 Contribution Margin Gas Utility $ 196.5 $
Slide 10: Managing expenses
Managing expenses Third Quarter Ended June 30, Millions Change (Millions) 2018 2017 $ % Operating Expenses Gas Utility Natural & propane gas $ 107.2 $ 76.7 $ 30.5 40% Operation and maintenance (O&M) 105.6 100.8 4.8 5% Depreciation & amortization (D&A) 40.5 38.4 2.1 5% Taxes, other than income taxes
Slide 11: Delivering solid year-to-date performance
Delivering solid year-to-date performance Nine Months Ended June 30, Millions Per Diluted Share 1 Net Economic Earnings 2018 2017 2018 2017 Gas Utility $ 208.1 $ 187.3 $ 4.26 $ 4.02 Gas Marketing 18.2 3.7 0.37 0.08 Other (16.0) (12.9) (0.33) (0.28) $ 210.3 $ 178.1 $ 4.30 $ 3.82 Average Shares Outsta
Slide 12: Strengthening our financial position
Strengthening our 1 YTD adjusted EBITDA (Millions) financial position $500 • YTD FY18 adjusted EBITDA1 of $450 $400 $467 million, up 6% from last year $350 • Ample liquidity provided by our $300 $440 $467 $975 million credit facility and $250 commercial paper program $200 2 • Solid long-term equity
Slide 13: Staying on track with our capital spend plan
Staying on track with our Capital expenditures (Millions) capital spend plan $350 $334 $299 35 $300 19 29 • YTD FY18 spend is up nearly 12% $250 31 – $188 million for infrastructure $200 upgrades $150 270 – $59 million for new business 249 $100 • FY18 capital expenditures target $50 remains $500 mil
Slide 14: Growing our dividend
Growing our dividend Annualized dividends per share +7.1% $2.30 $2.251 Dividend Yield +7.1% 3.2%2 $2.10 $2.10 +6.5% +4.5% $1.96 +2.4% +3.5% $1.90 $1.84 $1.76 $1.70 $1.70 $1.66 $1.50 $1.30 2012 2013 2014 2015 2016 2017 2018 • Board declared quarterly dividend of $0.5625 per share, payable October 2 •
Slide 15: Driving future earnings growth
Driving future earnings growth Net economic earnings per share • Affirming our 2018 NEEPS guidance of $3.65 - $3.75 • Q4 2018 loss expected to be double the level of last several years due primarily to the new Missouri rate design • Long-term NEEPS growth target remains 4% - 7% off of run-rate 2018
Slide 16: Investing for long-term growth
Investing for Capital expenditures forecast (Millions) long-term growth 5-year forecast: $2.5B $575 • 5-year capital investment forecast $500 60 125 $475 10 $490 10 $500 10 70 remains $2.5 billion 60 70 70 70 – Driven by utility infrastructure upgrade programs with lives up to 20 years 395 410 420 3
Slide 17: We’re bringing people and energy together
We’re bringing people and energy together in ways that enrich the lives of those we serve and add value for our stakeholders. 17 Spire | Third Quarter FY18 Earnings Conference Call
Slide 18: Appendix
Appendix 18 Spire | Third Quarter FY18 Earnings Conference Call
Slide 19: Our Spire utility portfolio
Our Spire utility portfolio Alabama MO East MO West Gulf Mississippi (Alagasco) (Laclede Gas) (MGE) (Mobile Gas) (Willmut Gas) Founded 1852 1857 1867 1836 1933 Primary Office Birmingham St. Louis Kansas City Mobile Hattiesburg Employees 826 1,670 579 1631 Customers 421,000 651,000 513,000 84,900 18,
Slide 20: Income tax expense
Income tax expense Nine months ended June 30, Quarter ended June 30, (Millions) 2018 2017 2018 2017 GAAP income tax (benefit) expense $ (8.5) $ 84.3 $ 5.7 $ 8.7 Add: Benefit from Revaluation of net deferred tax liabilities (TCJA) Balance at 12/31/17 50.0 — — — Adjustment due to the Missouri rate cas
Slide 21: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per Diluted (Millions, except per share amounts) Utility Marketing Other Total Share2 Three Months Ended June 30, 2018 Net Income (Loss) (GAAP) $ 18.5 $ 16.2 $ (8.8) $ 25.9 $ 0.52 Adjustments, pre-tax: Unrealized gain on energy-related derivati
Slide 22: Net economic earnings (non-GAAP) reconciliation
Net economic earnings (non-GAAP) reconciliation Gas Gas Per Diluted (Millions, except per share amounts) Utility Marketing Other Total Share2 Nine Months Ended June 30, 2018 Net Income (GAAP) $ 166.2 $ 20.0 $ 53.9 $ 240.1 $ 4.91 Adjustments, pre-tax: Missouri regulatory adjustments 30.6 - - 30.6 0.6
Slide 23: Contribution margin (non-GAAP) reconciliation
Contribution margin (non-GAAP) reconciliation Gas Gas (Millions) Utility Marketing Other Eliminations Consolidated Three Months Ended June 30, 2018 Operating income (loss) (GAAP) $ 35.0 $ 21.6 $ (4.2) $ - $ 52.4 Operation and maintenance 107.9 2.0 7.7 (2.6) 115.0 Depreciation and amortization 40.5 -
Slide 24: Adjusted EBITDA and adjusted long-term capitalization reconciliation
Adjusted EBITDA1 (non-GAAP) reconciliation Nine Months Ended June 30, (Millions) 2018 2017 Net Income $ 240.1 $ 174.9 Add back: Interest charges 74.0 66.2 Regulatory asset writeoffs 2 38.4 - Income tax (benefit) expense (8.5) 84.3 Depreciation & amortization 122.9 114.4 Adjusted EBITDA $ 466.9 $ 439